Shan Hanes, the former CEO of Heartland Tri-State Bank, was sentenced to 293 months in federal prison for embezzling $47.1 million in a cryptocurrency fraud scheme. Hanes pleaded guilty to one count of embezzlement by a bank officer after executing 11 unauthorized wire transfers to a cryptocurrency wallet between May and July 2023. This illegal scheme, known as “pig butchering,” involved luring unsuspecting investors into fraudulent digital asset investments.
As a result of Hanes’s actions, the collapse of Heartland Tri-State Bank ensued, leaving investors with a $9 million loss. The Federal Deposit Insurance Corporation (FDIC), which insured the bank at the time, absorbed the remaining loss of $38.1 million. The bank was unable to recover the funds transferred to multiple cryptocurrency accounts controlled by unidentified third parties, further exacerbating the situation.
U.S. Attorney Kate E. Brubacher condemned Hanes for his role in the embezzlement scam, stating that his actions went against his professional obligations, personal relationships, and federal law. FBI Special Agent in Charge Stephen Cyrus highlighted how Hanes’s betrayal of trust not only affected the bank and its investors but also eroded confidence in financial institutions. Korey Brinkman, Special Agent-in-Charge of FHFA-OIG’s Central Region, emphasized the significant breach of trust caused by Hanes’s actions, leading to substantial losses for bank customers and contributing to the institution’s downfall.
The sentencing of Shan Hanes serves as a poignant reminder that executives who compromise the stability of community banks will face justice. Special Agent Jon Ellwanger expressed satisfaction in the collaborative efforts of federal law enforcement that brought about this outcome. The U.S. Attorney’s Office was instrumental in ensuring that Hanes was held accountable for his crimes, sending a strong message that illegal activities in the financial sector will not be tolerated.